Tuesday, September 24, 2013

Many of us had seen the handwriting on the wall: when there is nothing your boss can tell you that is different than statements released to the press and to the Wall Street markets, then it's time to start reviewing other opportunities. Five years ago, I had started to do that, thinking there would be time enough to leave at the end of the year.

Little did we know that the FDIC had already conducted an auction of Washington Mutual, and that the lucky bidder was JPMorgan Chase. On September 25, 2008, at the end of the day, it came across the wires: the FDIC had seized Washington Mutual. Later that evening, we all hopped on to a teleconference with Jamie Dimon. The next morning, his team was in town to meet with senior management.

Washington Mutual had taken on so much credit and market risk that it sank under the weight of fear and disbelief generated once Lehman Brothers failed earlier in the month. The media continued to grind out stories on which banks were too big to fail, as credit rating agencies, themselves later found to be in disgrace, continued to downgrade Washington Mutual. Depositors started taking their money out of the bank, which led to more of the same. Which led the FDIC to take the actions it did.

Five years later, I see some of the same types of reckless behaviors in large banks. The behavior seems to be unaffected by large fines or the expansion of enterprise risk management functions. When 80-90% of your focus is on task and achievement of corporate goals, then ethical behavior takes a back seat to greed and ambition.

Risk-taking is an essential part of growth. So is doing the right thing.

Tonight some of us are going to lift a glass to a company that had everything we could imagine early in 2000, when it started to grow exponentially. Great people that respected each other and did the right thing. A culture that valued teamwork, innovation and excellence and was not afraid of either growth or change. There are lessons here that can be extrapolated for other companies struggling right now with some of the same challenges.

I am happy to have kept in touch with so many of my Washington Mutual colleagues, pleased to see where they have landed and the differences they are making for other companies now.

Monday, September 23, 2013

I like applying what I know to related disciplines, so it was a real pleasure to be invited for two days of panel work in Washington DC last week, at the National Academies. All four are housed in The Keck Center -- the National Institute of Science, the National Institute of Medicine, the National Institute of Engineering, and the National Research Board, under whose aegis my panel was located -- and it's an elegant, functional building.

I was most taken by the large interior wall that I never did get a full shot of, but here are some of the elements that are part of the wall.

The Darwin quote and image to the right are part of an element of the wall shown above.

I was also taken by the cornerstone quote from Thomas Jefferson on the outside of the building.

The work we were able to accomplish in two days was significant. It will lead to the creation of a guidebook for managing risk across the enterprise in state departments of transportation. Our ten person panel is a mix of risk managers from departments of transportation around the country and several risk experts, as well as liaisons from federal agencies like the Federal Highway Administration and TSA. I'll be reading a number of proposals from potential contractors for the work, as well as coming up to speed in risk literature that has already been created by the National Research Council. We'll meet again later this year to select the contractor.

A side benefit of the work is access to the National Academies Bookstore.

I brought back two books published by the Council that pertain to my ongoing research, writing and speaking, but especially to the introductory operational risk course I start teaching this week. The first is an older publication, Biotechnology Research in an Age of Terrorism. The other is more recent, but still four years old: Technology, Policy, Law, and Ethics Regarding U.S. Acquisition and Use of Cyberattack Capabilities.

Saturday, September 14, 2013

When I spoke at Starbucks last week, I spent roughly half my time on managing critical corporate risk issues and the latter half of the talk on managing personal risk. The second edition of Advice From A Risk Detective includes a new chapter on managing risks at school, including the one described in this painful New York Times article on cyber bullying and suicide.

The rise of all these new and largely unknown social media applications represents a high barrier for entry to parents who try to help their kids, and to stay connected in their lives. Note that the mother took the phone away, removed the girl from the school, and took other measures as well.

I have no good answers here, only the usual exhortation to stay closely connected to your child and his/her state of mind. In the meantime, because of the article, I just learned a bit more through google search about ask.fm, kik and voxer. It is hard to keep up, and hard to know how these spread so rapidly for young people, who can lead a whole separate life on these channels.

Wednesday, September 11, 2013

From Billy Collins, poet laureate of the United StatesThis poem is dedicated to the victims of September 11 and to their survivors.

"The Names"

Yesterday, I lay awake in the palm of the night. A soft rain stole in, unhelped by any breeze, And when I saw the silver glaze on the windows, I started with A, with Ackerman, as it happened, Then Baxter and Calabro, Davis and Eberling, names falling into place As droplets fell through the dark. Names printed on the ceiling of the night. Names slipping around a watery bend. Twenty-six willows on the banks of a stream. In the morning, I walked out barefoot Among thousands of flowers Heavy with dew like the eyes of tears, And each had a name -- Fiori inscribed on a yellow petal Then Gonzalez and Han, Ishikawa and Jenkins. Names written in the air And stitched into the cloth of the day. A name under a photograph taped to a mailbox. Monogram on a torn shirt, I see you spelled out on storefront windows And on the bright unfurled awnings of this city. I say the syllables as I turn a corner -- Kelly and Lee, Medina, Nardella, and O'Connor. When I peer into the woods, I see a thick tangle where letters are hidden As in a puzzle concocted for children. Parker and Quigley in the twigs of an ash, Rizzo, Schubert, Torres, and Upton, Secrets in the boughs of an ancient maple. Names written in the pale sky. Names rising in the updraft amid buildings. Names silent in stone Or cried out behind a door. Names blown over the earth and out to sea. In the evening -- weakening light, the last swallows. A boy on a lake lifts his oars. A woman by a window puts a match to a candle, And the names are outlined on the rose clouds -- Vanacore and Wallace, (let X stand, if it can, for the ones unfound) Then Young and Ziminsky, the final jolt of Z. Names etched on the head of a pin. One name spanning a bridge, another undergoing a tunnel. A blue name needled into the skin. Names of citizens, workers, mothers and fathers, The bright-eyed daughter, the quick son. Alphabet of names in a green field. Names in the small tracks of birds. Names lifted from a hat Or balanced on the tip of the tongue. Names wheeled into the dim warehouse of memory. So many names, there is barely room on the walls of the heart."

Friday, September 6, 2013

Bob Tedeschi did a great job of showing us some new options -- and not all of them tied to a computer, where passwords can be hacked -- for home security in his article yesterday in the New York Times.

Take a look and see what you think, especially of items and what looks like very good pricing on many of them. I've left my copy of the paper in the car so that I can go out and take a look at some of these devices.